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Business Services Franchise Defies Recession
by Jackie McDermott

"We choose not to participate in the current recession," jokes Craig Hohler, owner of an AlphaGraphics franchise in Houston.

"So far, Houston has been less affected by the recession than other areas of the country', he explains; but his success cannot be attributed solely to location. Hohler credits his franchisor’s reliable reputation and support network, as well as his own work ethic and adept business practices.

"We have a wide variety of customers, so if one client’s industry is suffering, it seems like another steps up to take its place. Some people tell me they’d be devastated if they lost their biggest account because it’s 50 percent of their business. We never went that route," says Craig, who opened his business with his wife, Michele, in 2003.

A diversified client base is just one of the reasons why his operation was up 30 percent in sales for the first quarter of 2009. He also continues to bring in new business. "People look at me cross-eyed when I tell them this," he admits, "but I would rather outrun my expenses by bringing in more sales. I don’t make sweeping cuts; I’ve never seen how that could work. I out-sell my expenses by continuing to make the effort to get new customers in the door. Because of this economy, I have actually gotten to meet with companies that I probably would have never thought of pursuing. Their management is telling them to cut costs so they interview printers. Because I am competitive with my pricing, this brings me new opportunities."

AlphaGraphics, a leader in print and visual communications, was founded in 1970 and became the first desktop publishing retailer in 1984. Its independently owned and operated business centers have a history of financial success. They average $1,131,001 in gross sales per franchise-the highest in the industry.

The Federal Trade Commission requires franchisors to disclose certain information to prospective franchisees via the Uniform Franchise Offering Circular (UFOC). Of course, AlphaGraphics representatives were legally mandated to share their UFOC with Hohler, but he notes that they were especially upfront during his extensive research process. He, too, speaks openly about finances. "Our revenue for 2008 was $1.65 million and we are projecting $1.8 million in 2009, despite this down economy. AlphaGraphics owners strive to make at least 20%+ net owner’s compensation. I haven’t gotten there yet, but that is because I put so much of my profit back into my business. If you are happy with your size and aren’t aiming to expand, that 20% goal is VERY attainable," he emphasizes.

Craig and his wife began their business from scratch in July 2003 in a 2,400-square-foot space. In May 2008, they were able to move to a 7000-square-foot facility. He reiterates, "Our current owner’s compensation is in the 15% range only because we are still expanding and constantly adding and upgrading our equipment."

Of course, not all owners’ businesses are as fruitful as Hohler’s-something he discovered during his preliminary investigative efforts. "When you meet those less successful people, you have to wonder if they are putting in enough work or are they just going through the motions. You have to consider the individual you speak with as well as the franchise," he cautions.

Hohler appreciated the opportunity to speak with a wide-range of franchisees, and he warns, "It’s real easy to listen to all of the positive comments and think, ‘This is a can’t miss opportunity.’ Make sure you find someone in the organization that has something negative to say! You cannot conduct too much due diligence."

He also suggests using both Web and print resources to gather as much information as possible before deciding on a franchise. "I used both versions of The Franchise Handbook, and the information really helped me during the negotiation process. I was much better prepared, and knew what kinds of questions to ask and what pitfalls to look out for," he recalls.

During his research phase, Hohler learned that you don’t need printing experience to own an AlphaGraphics center. "They have such a great infrastructure that a general knowledge of business and sales and marketing experience is enough," he explains. "Of course, I have many years of printing experience in my staff, and I’m not the one running the press or design work!"

Craig’s pervious career was in an industry quite different than visual communications. He worked for a national disaster restoration company. "I was there for 20 years, but I always wanted to start my own business. It is the only true way to achieve financial security." He recollects the industry events that served as his impetus: "When I was 49 years old, there was a huge mold crisis. Everyone was afraid that black mold was fatal, so our business got into the mold restoration and made A LOT of money. I was able to put quite a bit into savings. Unfortunately, insurance companies soon decided not to pay for this type of clean-up anymore. We were growing and growing, and then all of sudden, we started moving back."

Because he lacked experience in other industries, Hohler felt he would be best suited for a franchising program, since it would offer support and training along the way. Of course, many of his managerial skills from his prior job lend themselves to his new success. "Management is management," he admits, acknowledging that he could be an efficacious leader in any field. “Michele and I narrowed our options down by considering what industries we didn’t want to work in, such as food service or restoration. We were seeking a business that would allow us to make enough profit from a single location, and perhaps most importantly, something that would allow me to work normal business hours."

In his previous position, Hohler was on call whenever a disaster struck-24 hours a day. He wanted to run a business with a distinct open and close time, a business that would allow him to set a consistent schedule and maintain a certain quality of life. He knew the $108 billion printing and publishing industry could allow this flexibility, and he was impressed with AlphaGraphics’ sales figures, as well as with the responsiveness of the representative he initially spoke with, explaining, "He always called me back and was reliable in his follow-up. You’d be amazed as to how many franchisors didn’t even bother returning my messages during my research process!"

The Hohlers attended a discovery day at the company’s headquarters in Salt Lake City, Utah to meet the executives and learn more about the program. Both left impressed, and Craig was especially keen to learn that AlphaGraphics makes its revenue solely by supporting its franchises. "I came across a lot of company owned operations. I had to wonder how much attention they would really give me if they had to worry about making their own profit," he says.

Craig confirms that like the sales representative he dealt with years ago, the AlphaGraphics’ team consistently delivers on promises. "It’s a great organization, and the team has done everything it has ever told me it would do. It keeps us on the edge of the technology bubble," he praises. "This industry changes everyday and there just isn’t enough time or resources to keep up with it. I depend on my franchisor for that."

He also appreciates the peer groups his franchisor encouraged him and his colleagues to establish. "Owning your own business can be lonely, but because of this structure, I have all the support I need," he says. "It’s one of the best things AlphaGraphics ever did. I get together with other franchisees in the area at least once a quarter to share ideas and discuss problems. And of course, we are available to each other via phone and email in between meetings. We talk all the time and I got some good friends out of it."

Despite his satisfaction with AlphaGraphics, Hohler points out that it is truly the individual who is responsible for his or her financial achievement.


AlphaGraphics franchisee Craig Hohler has found a recession-resistant business that gives him and his wife everything they were looking for.
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